ARB interim results December 2018
Revenue for the interim period increased by 1% to R1.357 billion (2017: R1.342 billion), gross profit climbed 2% to R318.8 million (2017: R312.5 million), operating profit fell by 15% to R91.6 million (2017: R107.4 million), while profit for the period attributable to ordinary shareholders decreased by 38% to R54.6 million (2017: R88.6 million). Furthermore, headline earnings per share lowered by 38.4% to 23.17 cents per share (2017: 37.62 cents per share).
ARB's policy is to distribute a single annual dividend for the full year up to a maximum of 40% of net profit after taxation attributable to ordinary shareholders. In line with this policy, no interim dividend has been declared.
The Group foresees little or no improvement in the general trading environment, given the low economic growth forecast for South Africa. We remain confident that the Group is well positioned and has the resources to continue to build customer loyalty; to secure a fair share of the limited project opportunities available and remain capable to take advantage of any improvement in trading conditions when the South African economy improves.
With effect from 1 January 2019, the Lighting Group acquired 100% of the shares of The Radiant Group (Pty) Ltd for a purchase consideration of R96,4m, and is in the final stages of acquiring the properties out of which this business operates for R88,0m. The Radiant brand is well known and well specified. Between Eurolux and Radiant, the Group has more Letters of Authority (the government electrical product approval certificates) than any other company and is in the best position to provide product to the wholesale and retail industries. The logistic and back office functions of both businesses will be rationalised and integrated but the Group intends to develop and retain the independence of the Radiant brand and reclaim its market share in the retail, wholesale and contractor market.
The Lighting Division will continue to expand its product offering to existing customers. The new cut wire, moulded plug and ready pack ranges will be increased with the acquisition of the Radiant and these operations will be rationalised and consolidated at Radiant. It is anticipated that this facility will contribute positively to the next six months' results. The Electrical Division completed the development of the new mega branch in Lords View in December and is currently operational. The current strategy is to redevelop the operation from a large branch into an automated distribution centre with a modern warehouse management system. This division will continue to invest, in the medium term, through targeted acquisitions and in organic growth opportunities through the establishment of new branches. Trading margins are expected to remain under pressure and costs and working capital continue to be closely managed. The division also has opportunities to supply product from its overhead line department to Eskom projects should any of these become available in the lead up to the general elections.
Whilst no other corporate activity has taken place during the period, the Group continues to evaluate acquisition opportunities. These interim statements, including these prospects have neither been reviewed nor reported on by the Company's auditors.